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Here's the Skinny: Are Slimmed-Down TV Packages the Answer to Cord Cutting?"Skinny bundles," TV packages composed of selected channels targeting specific customer segments, have the potential to attract elusive younger consumers to pay TV, according to Altman Vilandrie & Company's 7th annual consumer video survey. However, the survey also shows that two-thirds of older consumers, pay TV's most reliable subscribers, say they are wasting money for channels they don't use, meaning skinny bundles could end up cannibalizing the existing subscriber base. Skinny bundles are designed to attract younger viewers, who have come to expect more consumer choices and flexibility, with targeted, affordable packages. Nearly 70% of non-subscribing 18-24 year olds-more than any other age segment-agree that they would consider subscribing to pay TV if there were "more affordable channel lineups that fit my viewing tastes." The pay TV industry is anxious to appeal to young consumers, who subscribe at much lower rates than other age segments. This group includes both "cord cutters," who have dropped pay TV, and "cord nevers," who have never subscribed. "The surprising level of dissatisfaction with unwanted channels we found among older subscribers shows the difficult balancing act skinny bundles create for pay TV providers," said Jonathan Hurd, the Altman Vilandrie & Company director who leads the survey project. "It is critical for providers to design optimal bundles that maximize adoption of new subscribers while simultaneously limiting appeal to existing customers - no small task, based on simulations we've run using the survey findings." Skinny bundles of live TV channels from internet providers Sling TV, PlayStation Vue, and soon Hulu (News - Alert) seek to target price sensitive consumers who are comfortable watching online video. But Dish's new Flex Packs have extended the skinny bundle concept to traditional pay TV. Skinny bundles may end up attracting older consumers disproportionately: 63% of pay TV subscribers aged 55 and older-more than any other age range-agree that they are "wasting money because my pay TV service includes many TV channels that my household does not watch." This age group is far less likely to switch to online video services-only 30% watch TV shows or movies online weekly-but may end up downsizing to skinny bundles that include traditional pay TV channels. The survey confirmed that young consumers trn to more economical online video options rather than traditional pay TV. Seventy-five percent of 18-34-year-olds watch online video from Netflix, Amazon Prime, or Hulu Plus at least once per week, far more than the 22% of consumers age 55 and above. And the trend among younger consumers toward online sources continues to grow: in a typical week, nearly 80% of 18-24-year-olds watch TV shows or movies on the Internet, up from 60% five years ago. To further assess the potential impact of skinny bundling, Altman Vilandrie & Company has developed an innovative simulator-based on individual survey respondent preferences for 150 different TV channels and other features-that estimates potential market share and revenue given any combination of channels at any price point. The survey, conducted by Altman Vilandrie & Company since 2010 and co-sponsored this year by Survey Sampling International, also analyzed pay TV subscribership, online video usage, mobile viewing, multitasking, and TV Everywhere awareness and usage. Other findings include:
Additional key portions of analysis are available to media by request. Altman Vilandrie & Company fielded the online survey in July 2016 to more than 5,000 respondents provided by Survey Sampling International. For details about further research topics and more information about the study, contact Jonathan Hurd at [email protected].
About Altman Vilandrie & Company Ninety percent of the boutique firm's operator clients are large- to mid-cap companies including service providers, technology and software developers, and media companies. Altman Vilandrie & Company's financial clients include many of the largest and most prominent investors in the telecom, media and technology markets.
About Survey Sampling International
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